As we know, the construction industry has faced some unique challenges following the restrictions put in place to stop the spread of Covid-19. While many businesses shut their doors and worked from home, construction sites remained open with complex new regulations in place. While this caused disruption across multiple sectors, it’s proven particularly difficult for the central London office market.

Initially many contractors shut down to assess the impact of these new rules on their workforce, but at the time of writing many sites have since reopened and are operational, at least for now. This is a result of a consultation between the Government and the Construction Leadership Council which set out a raft of new operating procedures.

Consequently, contractors and project managers are now working together to undertake and deliver site specific risk assessments in order to stay on track.

For example, working in high rise towers across London has thrown up some particular issues regarding accessing  upper floors via lifts. Often designed to cater for up to 50 people, lift capacity has been severely restricted in order to meet social distancing measures. This, in turn, has had an impact on general activity and the delivery of goods and materials to where they need to be. On a larger scale, it has led to a reduction of the number of operatives who can physically work on sites, as contractors prioritise the welfare of their staff.

Despite the obvious constraints, pressure remains on contractors to complete projects and maintain revenue. They are traditionally heavily reliant on cash flow and late payments and further delays will subsequently place strain on many businesses.

There are also a number of other considerations, such as the availability of materials and labour, which are likely to have more of a long-term impact. It’s crucial for contractors to adapt and find innovative solutions to keep projects moving including reviewing project strategies, adjusting design and procurement routes and extending design periods.

Aside from the onsite practicalities, there is also the contractual agreement between the parties. Inevitable delays need to be managed by negotiating amicable ways forward across multiple projects. However, there’s still the question of who will end up paying for delays and, depending on the wording of the contract, the answer could prove terminal for some.

At present, there’s an annual average of 4.9 million sq ft of speculative supply to be delivered across central London over the next five years. However, with vacancy rates at 5.3 per cent and Grade A take-up standing at approximately 8.4 million sq ft per annum, there remains a potential shortfall of space. With this in mind, both new and refurbished stock will be crucial to ensure business as usual one lockdown is lifted.

So in the short term, once we return to some semblance of normality, we’re likely to see an increase in construction activity throughout Q3 and Q4 of 2020, dependent on the availability of materials, labour resources and the alleviation of lockdown measures.

Beyond this, it’s unclear what the impact of Covid-19 will have on the overall economy and resource pipeline. This creates risks and opportunity for contractors, landlords and developers alike.

Further information

Read more: City Office Market Watch